International Accounting 4E Timothy DoupnikHector Perera Test Bank Chapter 008Word下载.docx
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C.
Convertingthelanguageusedinfinancialstatementsfromforeigntodomestic
D.
Convertinghistoriccostfinancialstatementsintocurrentcostfinancialstatements
2.
Companiesmustchoosebetweenwhichexchangeratesforconsolidatingforeignsubsidiaries?
Spotrateandforwardrate
Spotrateandclosingrate
Currentrateandhistoricalrate
Domesticrateandinternationalrate
3.
Whentheparentcompanyofaforeignsubsidiarybelievesthatallofitsinvestmentinthesubsidiaryisexposedtoforeignexchangerisk,whatmethodoftranslationshouldbeusedinconsolidatingthefinancialstatements?
Currentratemethod
Current/noncurrentmethod
Monetary/nonmonetarymethod
Temporalmethod
4.
Whenwouldthebalancesheetexposurearisingfromthecurrentratemethodbecomerealized?
Itisrealizedoncethefinancialstatementsoftheforeignoperationandtheparentareconsolidated.
Itisrealizedanytimethehistoricalexchangerateisdifferentfromthespotrateatthebalancesheetdate.
Itisrealizedwhentheforeignoperationissoldatbookvalueandtheproceedsareconvertedintoparentcompanycurrency.
Itcanneverberealizedbecauseitisonlytheresultofthechoiceofaccountingmethodsanddoesnotreflectrealexposure.
5.
Intheirresearchpublishedin1988relatedtotranslatingforeigncurrencyfinancialstatements,DoupnikandEvansfoundthatU.S.multinationalswerebiasedinfavorofusingaforeigncurrencyasthefunctionalcurrency.Whatreasondidtheresearchersgiveforthismanagementdecision?
ItwaseasierthanprovingtotheFASBthatasubsidiary'
sfunctionalcurrencywastheU.S.dollar.
Doingsoallowedcompaniesgreaterlatitudeinselectingthemethodoftranslatingforeigncurrencyfinancialstatements.
Thisallowstheuseofthecurrentmethod,whichdefersrecognizingtranslationgainsorlossesinincome.
Thisallowstheuseofthetemporalmethod,whichdefersrecognizingtransactionadjustmentsinincome.
6.
WhichofthefollowingisNOTamongthefourmethodswhichhavebeenusedtotranslateforeigncurrencyfinancialstatementsglobally?
Thehistoric/non-historicmethod
Themonetary/nonmonetarymethod
Thetemporalmethod
Thecurrent/noncurrentmethod
7.
NonmonetaryassetsDONOTinclude:
fixedassets.
inventory.
accountsreceivable.
customerdeposits.
8.
Whichofthefollowingistrueofmonetaryassets?
Monetaryassetsaretranslatedathistoricalexchangeratesunderalltranslationmethods.
Monetaryassetsarethoseassetswhosevaluesdonotfluctuateovertime.
Monetaryassetsincludecurrentassetslikemarketablesecurities.
Monetaryassetsarealwaystranslatedatcurrentexchangerates.
9.
Whichofthefollowingstatementsistrueofnonlocalcurrencybalancesintheforeigncurrencyfinancialstatementsofforeignoperations?
Thesearenotreportedintheconsolidatedfinancialstatements.
Anygainisshowninthebalancesheetofthecompanyasanasset.
Anylossisreflectedinthemeasurementofconsolidatednetincome.
Nogainorlossisreportedinthefinancialstatements.
10.
Whatisthecauseofbalancesheetexposure?
Convertingsubsidiaryaccountbalancestobalancesdenominatedintheparentcompany'
scurrencyathistoricalexchangerates
Completinginternationaltransactionsincurrencyotherthanthecurrencyofthehomecompany
Translatingsubsidiaryaccountbalancestoamountsdenominatedintheparentcompany'
scurrency
Noneoftheabove
11.
Whatisanothertermfor"
balancesheetexposure?
"
Transactionexposure
Exchangeexposure
Translationexposure
Negativeexposure
12.
Whichofthefollowingitemsinthebalancesheetissubjecttoaccountingexposure?
Onlyassets
Onlyliabilitiesandowners'
equity
Allaccountstranslatedathistoricalexchangerates
Allaccountstranslatedatcurrentexchangerates
13.
Homeko,Inc.islocatedintheU.S.,butithassubsidiariesinGermany.WhentheeuroappreciatesrelativetotheU.S.dollar,whatisthedirectionofthetranslationadjustmenttoconsolidateHomeko'
sfinancialstatements?
Whenthereisnetassetexposure,thetranslationadjustmentwillbepositive.
Whenthereisnetliabilityexposure,thetranslationadjustmentwillbepositive.
Thedirectionoftheadjustmentisindeterminate.
Therewillbenoadjustmentnecessaryunlessthedifferenceisrealized.
14.
Whatistheprimarydifferencebetweentransactionexposureandaccountingexposure?
Transactionexposureresultsfromchangesincurrencyexchangerates,whereasaccountingexposureistheresultofchangesinaccountingmethod.
Transactionexposureresultsinchangesincashflow,whereasaccountingexposuredoesnotnecessarilyresultinchangesincashflow.
Transactionexposuremustbehedged,butaccountingexposuredoesnotneedtobehedged.
Transactionexposureaffectsonlymonetaryassetsandliabilities,whereasaccountingexposureaffectsallassetsandliabilities.
15.
ExcellentInc.islocatedintheU.S.,butithassubsidiariesinJapan.WhentheyendepreciatesrelativetotheU.S.dollar,whatisthedirectionofthetranslationadjustmenttoconsolidateExcellent'
16.
Whichofthefollowingmethodsfortranslatingforeigncurrencyfinancialstatementsattemptstoproduceconsolidatedfinancialstatementsasifaforeignsubsidiaryhadactuallyusedtheparentcompany'
scurrencyforallitstransactions?
Current/Noncurrentmethod
Monetary/Nonmonetarymethod
17.
Ofthefollowingmethodsfortranslatingforeigncurrencyfinancialstatements,whichonemaintainstheunderlyingvaluationmethod(i.e.historicalcostorcurrentvalue)usedbytheforeignsubsidiary?
18.
EsscoLtd,aforeignsubsidiaryofPeakoCorp.,haswrittendownitsinventorytocurrentmarketvalueundera"
lowerofcostormarket"
rule.WhenconsolidatingEssco'
sbalancesheetintoPeako'
sbalancesheetusingthecurrentratemethod,whatexchangerateshouldbeusedfortheinventoryunderthetemporalmethod?
Historicalrate
Currentrate
Averagerate
Cannotbedeterminedwiththeinformationgiven
19.
WhatexchangerateshouldbeusedtotranslatethecommonstockofEsscoLtd,aforeignsubsidiaryofPeakoCorp.,whenconsolidatingthefinancialstatementsusingthecurrentratemethod?
20.
Underthetemporalmethodofconsolidatingforeigncurrencyfinancialstatements,whatexchangerateshouldbeusedfortranslatingthedepreciationexpenserecordedbyasubsidiary?
Forwardrate
21.
ADanishsubsidiaryofaU.S.corporationrecordedabuildingitpurchasedin2010for100,000,000krone,whentheexchangeratewas$0.132/krone.Thecurrentexchangerateis$0.163/krone.Underthetemporalmethod,howshouldthetranslatedamountoftherestatedassetbeinterpreted?
TheU.S.parentwouldhavetopay$16,300,000toacquirethebuildingtoday.
TheU.S.parentwouldhavehadtopay$13,200,000toacquirethebuildingin2010.
Thebuildingisworth$13,200,000totheU.S.parenttoday.
22.
ADanishsubsidiaryofaU.S.corporationrecordedabuildingitpurchasedin2010for100,000,000krone,whentheexchangeratewas$0.132/krone.Thecurrentexchangerateis$0.163/krone.Underthecurrentratemethod,howshouldthetranslatedamountoftherestatedassetbeinterpreted?
23.
Whichofthefollowingmethodsusesthecurrentexchangeratetoconsolidateall
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